Chocolates: Half a Box or a Full Box?
Or, why is it so hard to save money?
I attended a financial planning conference recently that included an interview with Dan Ariely, a Duke professor who does research in the field of Behavioral Economics. He talked about why it’s so hard to save money.
He asked this question in a study:
Would you rather have half a box of chocolates now, or a full box in a week?
What would you pick? Most people in the study wanted the half box now.
He thinks this is because chocolate now is concrete and immediate. It’s very difficult to imagine a future abstract benefit, even though it’s better. It’s easier to choose something you know right away.
He asked another question:
Would you rather have half a box of chocolates a year from now, or a full box in a year plus one week?
What would you pick? Most people picked the full box. The delay between half box and full box is the same in both questions: one week.
Professor Ariely says this is just like saving money. I can spend my money now on something concrete, immediate and certain, or save it for a future abstract benefit that might be uncertain. It’s easier to spend now.
That’s human nature. It’s hard to save money.